European Union, United Nations, US, China agree to work with Fatah-Hamas government, despite Israeli criticism.

The European Union and the United Nations will work with the new Palestinian unity government, on condition it sticks to the principle of peace with Israel based on a two-state solution, the bodies said on Tuesday, joining in the ranks of the US and China.

The US administration has already said it would work with the unity government that Palestinian Authority President Mahmoud Abbas swore in on Monday under a reconciliation deal with Hamas, an Islamist group that advocates Israel's destruction.

Setting a policy in line with US and EU demands, the Western-backed Palestinian leader said his administration would honor agreements that underlie the stalled peace process with Israel.

"We welcome ... the declaration by President Abbas that this new government is committed to the principle of the two state solution based on the 1967 borders, to the recognition of Israel's legitimate right to exist," the EU said in a statement.

"The EU's engagement with the new Palestinian government will be based on its adherence to these policies and commitments," it said.

UN Secretary-General Ban Ki-moon welcomed on Tuesday the announcement of a Palestinian unity government between Fatah and Hamas.

The United Nations in a statement said it was prepared to support the new government and its efforts to reunite the West Bank and Gaza.

The UN chief expressed his hope that the move would provide new opportunities to progress the peace process with Israel along the basis of a two-state solution, the recognition of Israel and a commitment to revoke violence.

“The United Nations has long underscored the need for progress towards Palestinian unity in line with existing resolutions, within the framework of the Palestinian Authority and the commitments of the Palestine Liberation Organization,” read a statement issued by Ban’s spokesperson.

China also said on Tuesday that it welcomed the new Palestinian unity government.

Chinese Foreign Ministry spokesman Hong Lei said internal reconciliation would be conducive to peace talks between the Palestinian Authority and Israel.

"China welcomes the Palestinians forming a unity government. Realizing internal reconciliation is conducive to Palestinian internal solidarity, and is also conducive to the Palestinians pushing forward peace talks with Israel," Hong told a regular news conference in Beijing.

China has traditionally had close relations with the Palestinians, but in recent years has also had good ties with Israel, especially in the field of defense.

Israel renewed its criticism of the unity government.

Earlier on Tuesday, Netanyahu warned Europe against making the "mistake" of granting legitimacy to the newly united Fatah-Hamas government.

Netanyahu appealed to French President Francois Hollande in a phone call, saying the Palestinian unity government that was officially announced on Monday demonstrated "a Palestinian step against peace and in favor of terrorism."

As Israel views Hamas as a terrorist organization intent on the destruction of the Jewish state, the premier added that no European country would be prepared to accept a terrorist organization as part of its government and therefore should not acknowledged a Palestinian government backed by Hamas.

"Hamas is a ruthless terrorist organization responsible for the murder of countless innocent civilians and an organization that says my country Israel should be destroyed," Mark Regev, spokesman for Prime Minister Binyamin Netanyahu, said on Tuesday.

"People who want peace, people who want reconciliation here in the Middle East should be calling upon the Palestinian leadership to annul this pact with Hamas and to return to peace talks." He did not directly refer to the EU position.

Israel's intelligence minister said the notion that the new cabinet was made up of technocrats rather than politicians - something that made it diplomatically easier for the West to deal with it - was bogus.

"You cannot present it internally as a Hamas government and present it on the outside as a technocrats' government," Yuval Steinitz told Army Radio.

"If these people are identified with Hamas, or are people with whom Hamas identifies and were appointed by Hamas then these are Hamas representatives."